T-bills are paying more and more

It’s been approximately six months since i wrote my article on T-bills. Since then T-bills rates have went up considerably.

The six month T-bill was yielding 3.22%. Today the T-bill is yielding 5.08%. That is a whopping 58% increase!

I am still purchasing short-term T-bills as my old ones mature.

Here are the current T-bill rates:

1 month4.56%
6 month5.08%
1 year5.087%
2 year4.683%
Treasury Bill Rates

As you can see, the six month and one year T-bills are over 5% now.

Let’s look at how much on a percentage basis, each has went up YTD and within the last month.

One month IncreaseYTD
1 month7.15%55%
6 month24.7%41.5%
1 year36%35%
2 year48%26%

Looking at the data, it appears that long-term rates are increasing at a higher rote over the last month. On the other hand, the shorter-term rates increased a lot more since the beginning of the year.

If we want the yield curve to come out of inversion, we need the long-term rates to increase more and the short-term rates to fall. So, the higher rates we are seeing in the 2 year and further over the last month is actually a good thing.

What does this mean for me?

For me, I am not ready to step out on the yield curve and purchase Treasuries longer than a year. I am keeping my purchases in the 3 month to 6 month maturity dates. I’m certainly not telling you to do this. However, for me, I believe the stock market will eventually present some good buying opportunities, so I want the cash available if the opportunity rises. Also, it seems that the long-term rates aren’t done increasing, so I think I can get better rates for longer-term Treasuries in the near future.

Before the end of the year, there is a good chance I will remove a portion of my I-bonds as well. I think inflation will be here for awhile; however, I question whether ibonds will remain a good place for me to park my cash if T-bill keep increasing.

On a random side note-As of today I am back to 10% cash. I sold off some of my winners like Traveler’s Insurance, some of my Fedex shares that were up 20%, and even a small portion of my Uber that had ran up 35%. For me, I just want to conserve some gains and capital. I won’t stay on the sidelines with it for long.

Wishing you the best on your investment journey!

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